Payment arrangements including return of paid-in VAT no longer available after 31 August
Until 31 August, companies could request for the VAT they had paid at the beginning of 2020 to be returned to them. This request could be made by applying for a payment arrangement. As part of their payment arrangements, the companies agreed to pay the VAT back to the Tax Administration at a later date.
All payment arrangements granted between 25 May and 31 August are subject to eased terms. Read more about payment arrangements with eased terms.
VAT must be paid back to the Tax Administration at a later date
By requesting a payment arrangement, your company could get back the VAT it paid in January, February and March 2020. The request had to be submitted by 31 August. However, if you had paid late-payment interest on the VAT, the interest was not returned. Only the original VAT amount without the late-payment interest was returned to you.
If your VAT period is a year, you could request 25% of your VAT for 2019 to be returned.
However, this does not mean that your company could permanently keep the VAT returned to it. As part of the payment arrangement, the company must agree to pay the VAT back to the Tax Administration at a later date.
When you pay the VAT back to the Tax Administration according to the agreement, you will also have to pay 2.5% of late-payment interest on the VAT amount. The late-payment interest is calculated from the original due date of the tax. The interest is automatically included in the payment instalments of the arrangement.
Example: A company has paid a total of €50,000 in VAT on the due dates 13 January, 12 February and 12 March. The company requests a payment arrangement in May and asks for the VAT to be returned to them. In June, the Tax Administration accepts the payment arrangement request and returns €50,000 to the company. The first instalment of the payment arrangement is due in September. The instalments include 2.5% of late-payment interest on the VAT, calculated from the original due date up to the date of payment.
Payment arrangement with eased terms affects how your tax refunds are used
If you requested a payment arrangement with eased terms between 25 March and 31 August and the Tax Administration granted your request, your tax refunds will not be used on taxes included in the payment arrangement during 2020. The Tax Administration will not use your tax refunds to pay taxes that are in the payment arrangement. Instead, the refunds will be paid directly to your company. However, tax refunds may still be used to pay tax debts that are not included in the payment arrangement. In addition, refunds may still be used to pay any debts that are being recovered by enforcement.
Tax refunds will not be used on taxes that are included in the payment arrangement if the arrangement was requested between 25 March and 31 August 2020.
If you received tax refunds in April, May or June and they were used to pay your taxes, you could ask the Tax Administration to cancel the use of the refunds. This had to be done by 27 July 2020. The tax refunds were then paid to your company.
You were paid the refunds that had been used between 25 March and the date of your payment arrangement. However, tax refunds may still be used to pay any tax debts that are not included in the payment arrangement. In addition, refunds may still be used to pay any debts that are being recovered by enforcement.
Note: If you requested cancellation of the use of refunds, the taxes on which the refunds were originally used became unpaid again. You will have to pay late-payment interest on the taxes, calculated from their original due dates. The unpaid taxes will be automatically included in your payment arrangement and you will pay them back as part of the arrangement.
Example: A company’s tax prepayment of €1,000 fell due on 23 April. In order to cover the tax, the Tax Administration used €1,000 of the company’s tax refunds.
In May, the company requested a payment arrangement and asked the Tax Administration to cancel the use of the refund. In June, the Tax Administration accepted the request and cancelled the use of the refund on the prepayment that had fallen due on 23 April. The company received €1,000 in tax refunds, but now their prepayment instalment was unpaid and overdue again. The unpaid instalment was automatically included in the company’s payment arrangement, and the company will pay it as part of the arrangement. Late-payment interest calculated from the original due date 23 April is added to the amount payable.
You will be notified when your request for payment arrangement has been processed
After your request for payment arrangement has been processed, you will be notified of whether the request was accepted or rejected. If you have asked for your paid-in VAT back, the VAT amount will be returned to you in approximately one week after the request is accepted. If you asked for the use of your refunds to be cancelled, the tax refunds will be paid to you in the same schedule.
Please note that your request for payment arrangement and the related requests concerning your paid-in VAT and tax refunds can only be accepted if
- your company does not have taxes in recovery by enforcement
- your company has filed all the required tax returns and reports to the Incomes Register (earnings payment reports and employer’s separate reports).
In addition, if your company or the people in charge of the company have previously neglected their tax liabilities or if your previous payment arrangement lapsed, you may be unqualified to get a new payment arrangement.
You cannot change the contents of an active payment arrangement.
For example, you cannot ask the Tax Administration to remove taxes from the arrangement or add new taxes to it.
In addition, you cannot change the number of payment instalments. However, you can make payments in an accelerated schedule, which may reduce the overall number of your payment instalments. Read more: Can I make bigger or more frequent payments than required by the payment plan?
Yes. You can make payments in your arrangement at a faster rate or in bigger instalments than what is required by your payment plan. Always remember to use the payment arrangement’s reference number.
You can check the reference number
- in the payment arrangement documentation, which you have received by post and in MyTax
- in MyTax (Log in > Click "Paying taxes” under the Activities tab on the home page > Find the reference number in the yellow box).
If you pay taxes included in the payment arrangement faster than the payment plan requires, then the total amount of taxes included in the arrangement decreases faster and you will need to pay less late-payment interest overall.
Make sure that you are aware of how much of the taxes included in the payment arrangement you have paid. You can see the overall status of your payment arrangement in real time in MyTax.